{"id":342326,"date":"2025-12-13T17:22:49","date_gmt":"2025-12-13T17:22:49","guid":{"rendered":"https:\/\/peraltafinancing.com\/recipes\/category-a-b\/beer\/beervana-how-doomed-are-we\/"},"modified":"2025-12-13T17:22:49","modified_gmt":"2025-12-13T17:22:49","slug":"beervana-how-doomed-are-we","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=342326","title":{"rendered":"Beervana: How Doomed Are We?"},"content":{"rendered":"


\n<\/p>\n

\n\n\n\n\n
<\/a><\/td>\n<\/tr>\n
Raptor<\/span> of death.<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Pete Dunlop has an excellent but alarming post in which he warns:<\/p>\n

\nAB is
\nquietly implementing a plan designed to bury independent craft brewers.
\nAnd they might just pull it off…<\/p>\n

You might not know it, but the High End kicked ass in 2016, a pretty
\nlousy year for craft beer. The High End’s growth rate hit 32 percent,
\neasily trumping the craft segment’s single digit growth. Bigly. Every
\nHigh End brand grew and they’re all showing continued growth into 2017.<\/p>\n<\/blockquote>\n

High End is of course ABI’s portfolio of erstwhile American craft breweries (Goose Island, Elysian, 10 Barrel, Breckenridge, et al).\u00a0 His post led to a spirited debate<\/b><\/a> on Facebook in which two camps formed: 1) we are so<\/i> screwed, and 2) don’t overreact; it’s not as bad as it looks. Since you know me as a man of subtle and restrained opinion, I will refrain from identifying my own camp. Rather, I’d like to point out a few variables to consider as you decide which team you’d like to join.<\/p>\n

The Emergence of Craft Tiers<\/b>
\u00a0<\/b>Until pretty recently, when you went to the grocery store all the beer in the craft segment (hereafter “craft beer” for brevity) was about the same price. Some sixers might be on periodic discount, but this was a retailer decision. Not too long ago, we saw the emergence of an upper tier of beer that was noticeably more expensive and shortly thereafter, a tier of cheaper craft. This was inevitable, as brewers began to segment and find sales in different pockets of the craft segment.<\/p>\n

Guess where ABI’s High End products mostly live? Sure, Goose Island still has a giant barrel program, but they’re all about mainstreaming Goose IPA as the<\/i> national mass market IPA. They do this through the efficiencies of their giant plants and distribution network, and they use it to drive down costs. The margins get thinner and thinner, but that’s okay so long as the volume’s going up. But most craft brewers will stick to the middle tier or gravitate to the upper tier. I’ve already talked about “mass craft<\/b><\/a>,” and when we look at Pete’s numbers, we’re seeing an explosion within that segment.<\/p>\n

Retailers Follow Customers<\/b>
There are no end of stories about the ways in which big companies attempt to pervert the market. In the 90s, Bud initiated a power play against craft beer by demanding its distributors only sell their products–something it toyed with again recently. Pay-to-play rumors are ubiquitous, and more than a few turn out to be real. Most recently, I have heard a rumor this week that Kroger, which owns a substantial amount of Portland’s grocery outlets, was going to start radically paring back their 22-ounce offerings, apparently a sop to ABI.<\/p>\n

I have no doubt that ABI will use its increasing might to control things at the distribution and retail level–they’ve done it in the past, and it is a great way to increase market share. There are many legal mechanisms for this kind of thing, which is exactly why we have antitrust laws. But here’s the thing: retailers service customers<\/i>, not manufacturers. Big breweries will try to limit the offerings on the shelves, but retailers aren’t going to sacrifice business just to please a big partner. In competitive markets like Oregon’s, it would be bad business indeed for a grocery chain to limit the sale of locals in favor of a giant section that includes Goose Island, Devil’s Backbone, and Four Peaks. The reason AB’s distributor-loyalty program collapsed in the 90s was because customers wanted variety and Bud couldn’t provide it.\u00a0 <\/p>\n

Don’t Over-value Current Trends<\/b>
Humans can’t help themselves. We over-value current trends. If you Google “craft beer sales<\/b><\/a>” and limit the search to 2013, you find article after article trumpeting the unstoppable juggernaut that is craft beer. (Sample title: “Craft beer sales to triple within 10-year period, says research group.”) In those heady years, everyone was writing the obituary of ABI.<\/p>\n

Today we’re seeing similar numbers from the High End (32% growth!), and our minds begin to accept that as a stable trend. Likewise, we hear that some of the bigger craft breweries had years of stagnation or decline, and that<\/i> also seems stable. Never mind that craft grew at something like 7% overall<\/b><\/a>, which is a much more impressive figure, given the size of the segment, than the High End’s growth spurt on its much-smaller base.\u00a0 Indeed, you’d sort of expect ABI’s brands to get quite a jump-start given 1) that many of them were relatively small to start with, 2) ABI has a nationwide network and the might of the biggest beer company in the world, and 3) ABI appears willing to exchange profit for growth, at least in the short term.<\/p>\n

\n______________<\/p>\n

\nOn Facebook, I argued pretty strongly for one of the camps (doomed vs not doomed). The truth is neither I nor anyone else can see into the future. Pete thinks the market is headed in the direction of mass craft, and that the number of drinkers who want high-quality locally-made beer is going to lose out. I’d bet against it, but I wouldn’t bet much.\u00a0<\/p>\n

\nStill, I do think nearly all of the analysis is a reaction to current trends. So far, we have seen no brand in the craft segment grow over a couple million barrels (I think that’s roughly where Blue Moon is, but they’re pretty secretive about those numbers). It’s easy to grow at 50% or even 100% when you’re making 100,000 barrels of beer. But where’s the ceiling? If I squint hard enough, I can see a world in which Goose IPA stops all comers in their tracks. But that takes an awful lot of squinting. I wouldn’t bury craft just yet.<\/p>\n<\/div>\n\n","protected":false},"excerpt":{"rendered":"

Raptor of death. Pete Dunlop has an excellent but alarming post in which he warns: AB is quietly implementing a plan designed to bury independent craft brewers. And they might just pull it off… You might not know it, but the High End kicked ass in 2016, a pretty lousy year for craft beer. The […]<\/p>\n","protected":false},"author":1,"featured_media":342327,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[137],"tags":[16370,39882],"dealstore":[],"offerexpiration":[],"class_list":["post-342326","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-beer","tag-beervana","tag-doomed"],"yoast_head":"\nBeervana: How Doomed Are We? - Som2ny Network<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/fivemor.com\/?p=342326\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Beervana: How Doomed Are We? - Som2ny Network\" \/>\n<meta property=\"og:description\" content=\"Raptor of death. 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